During the early hours of Tuesday, silver experienced a slight rally and is currently trading just above the psychologically significant $25 level. However, it's worth noting that silver has undergone a slight pullback over the past couple of days. This retreat was necessary following the sharp price increase. It remains to be seen if silver will continue to rise, but a pullback could be beneficial as the market has been on a continuous upward trend from the $20 level.
If the price of silver were to fall below the $25 level, it could potentially decline to $24, an area that has acted as a price magnet over the last few months. December and January trading used $24 as "fair value." A drop to this level could give traders an opportunity to buy silver at a better price, and it could be seen as a value purchase, especially for those who missed the rally to the upside. Typically, people do not like chasing trades, so any pullback at this point could be seen as a good opportunity.
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However, if silver breaks below the 50-Day EMA, a much deeper correction may occur. Currently, the 50-Day EMA is almost $2 below the current trading level. On the other hand, if silver can exceed the recent high from a few days ago, it could move towards the $27 level. Breaking the $27 level to the upside could result in a move towards the psychologically important $30 level. This move would generate a lot of headlines and has a significant amount of psychological importance.
It's important to monitor the US Dollar Index because silver and the US dollar typically have a negative correlation, although not always. Silver has an industrial component to its pricing, so any lack of industrial demand could have a negative impact on its price.
In conclusion, silver has undergone a slight pullback from its recent high, and whether or not it will continue to rise remains to be seen. A drop to the $24 level could provide traders with an opportunity to purchase silver at a better price, and a break below the 50-Day EMA could lead to a more significant correction. On the other hand, if silver can break the $27 level to the upside, it could reach the psychologically important $30 level. Finally, the US Dollar Index and industrial demand should be monitored as they could have a negative impact on the price of silver.
Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite.
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